1. The ratio which many observers use to quantify the stock market's opinion of a firm is the:

a ROE

b EPS

c. D/E

d. P/E

e. None of the above

2. Present Value Calculations:

a. can help the creation of value

b. can provide managers with a means of identifying the best investment choices

c. do not help in the creation of value

d. a and b

e. b and c

3. Flexibility issues are those which:

a. deal with a company’s financing reserves

b. impact the debt capacity that a firm should maintain

c. all of the above

4. A discount factor:

a. is the same as compounding future cash flows

b. performs the reverse function of a compounding interest rate

c. allows investors to quantify a figure which will assist them in comparing alternative investments

d. b and c

e. a,b and c

5. Which of the following methods results in a net present value of zero?

a. IRR

b. Payback

c. Discount payback

d. None of the above